CIO Survey 2016
Manufacturing Sector Findings
The Harvey Nash / KPMG CIO Survey is the largest IT leadership study in the world.
Almost 3,400 respondents across 82 countries representing over US$200bn of IT budget spend.
This Manufacturing industry sector snapshot provides survey responses from over 250 Manufacturing companies on some of the key topics and
highlights several areas where this sector’s responses were significantly different from those from across all industries.
KEY TOPICS
Looking forward, over the next 12 months, do you
expect your IT budget to?
What are the key business issues that your
management Board are looking for IT to address
(top 5)?
Increase
72%
Increasing operational
efficiencies
65%
45%*
60%
Saving costs
33%*
Stay the
same
22%*
17%
41%
Decrease
42% of manufacturing companies expect
their IT budgets to increase next year and
17% expect their IT budgets to decrease,
both in line with the all industries averages
of 45% and 22%.
*All-industries average
47%
Buying rather than building
Improving business
processes
42%
What steps are you taking to become more agile
and responsive?
Delivering business
intelligence / analytics
55%
Delivering consistent and
stable IT performance
55%
Compared to the all-industries average,
manufacturing companies place a higher
priority on improving business processes
(72% vs. 56% for all industries), increasing
operational efficiencies (65% vs. 57%) and
saving costs (60% vs. 50%).
Implementing agile
methodologies
40%
Multi-mode IT
32%
More external resources
32%
30%
Strategic partnerships
DevOps
12%
Other
3%
To become more agile and responsive,
manufacturing companies are more likely to
buy rather than build (47% vs.37% for all
industries), and less likely to utilize agile
methodologies (40% vs. 59%) and DevOps
(12% vs. 28%)
All-industries average
CLOUD
How would you characterize your current
investment in the following cloud services and how
do you expect that to change over time? (Significant
investment)
19%
IaaS
PaaS
SaaS
What are your top three reasons for using cloud
technology?
Improve availability and
resiliency
40%
Improve agility and
responsiveness
32%
12%
Simplfied management
38%
35%
28%
24%
What are your top three biggest challenges when
adopting cloud?
Integration with existing
architecture
Data loss and privacy risks
(including cross-border
issues)
Governance over cloud
solutions
58%
46%
36%
Accelerate product
development/innovation
27%
Legal and regulatory
compliance issues
31%
Save money
27%
Making the business
case/ROI
25%
44%
Current Year
Next 1-3 years
While manufacturing companies plan to
spend close to the all-industries average on
SaaS cloud services in the next 1-3 years,
they plan to invest less heavily in IaaS (32%
vs. 39% for all industries) and PaaS (28% vs.
37%)
Manufacturing companies are more likely to
invest in cloud services due to simplified
management (35% vs. 21% for all
industries), and are less likely to invest to
save money (27% vs. 33%).
While the cloud adoption challenges in
manufacturing largely reflect those of the
all-industries average, manufacturing
companies are more likely to face
challenges around integration with existing
architecture (58% vs. 47% for all industries).
Source: Harvey Nash/KPMG CIO Survey 2016
© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International..KPMG International provides no client services.
No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
DIGITAL DISRUPTION
Does your organization have a clear digital business
vision and strategy?
Yes, within
business
units
If you are currently experiencing digital disruption,
what is the primary source of disruption?
Yes, enterprisewide
20%
Don't know
34%*
29%*
13%*
34%
We hire people
New operating models
13%
Other
2%
Other
3%
We acquire
1%
IT leaders at manufacturing companies are
much more likely to respond that they do
not know the primary source of digital
disruption facing their companies (26% vs.
17 for all industries).
*All-industries average
14%
14%
No, but we are currently
working on one
Manufacturing companies, with their nonconsumer orientation, are much less likely
to have a digital business strategy within
business units or enterprise-wide, than the
all-industries average (40% vs.58% for all
industries).
22%
We develop our people
21%
New business models
26%
No
29%
We partner
24%
New innovative
products/services
24%*
31%
We contract
26%
New forms of customer
engagement
20%
What is the primary method you use for coping
with digital disruption?
Manufacturing companies are more likely to
turn to external resources to cope with
digital disruption by contracting (31% vs.
21% for all industries) or partnering (29%
vs. 24%), and are less likely to hire people
(14% vs. 26%).
All-industries average
SIGNIFICANT DIFFERENCES
What type of IT project is most appealing to your CEO?
49%
Manufacturing
Which functions do you feel suffer from a skills shortage?
51%
42%
32%
36%
39%
34%
Project management
Big data / analytics
All industries
37%
63%
Change management
ERP
One that SAVES money
One that MAKES money
Manufacturing company CEOs are much more focused on IT as a
vehicle to reduce costs than the all industries average. 49% of
respondents report that IT projects that save money appeal most
to their CEOs, compared to 37% for all industries.
25%
32%
13%
Manufacturing
All industries
Manufacturing companies face greater IT skills shortages in many
functions than other industries, most notably in project
management (42% vs. 32% for all industries), change
management (34% vs. 25%) and ERP (32% vs. 13%).
CONCLUSIONS
CIOs in the Manufacturing Sector report that their management leaders want IT to focus on enabling better process throughput, reduced waste and improved outcomes. There
is less emphasis on developing business intelligence / data analytics capabilities. This may indicate that the business leaders have come to understand that to the extent the
underlying processes can be digitized and automated, there will be an immediate pick up in real time data thus avoiding a two-step transformation.
When it comes to the adoption of cloud, Manufacturing CIOs have highlighted ‘integrating existing legacy architecture’ as a key challenge. Many of today’s discrete
manufacturing companies have been in business more than 50 years, and some more than 100. The growth of these companies has taken place through multiple acquisitions
and, despite everyone’s best intentions to integrate systems, commonize data and adopt global processes, it has not always happened. Therefore adopting or migrating to a
cloud technology is a much bigger proposition than it might be for other industries.
It is becoming clearer that the Office of the CIO should establish a capability to evaluate new technologies and disruptors that will drive efficiencies and effectiveness, as well
as potentially provide some self-funding from the savings. CIOs in the Manufacturing sector can enhance the value in their organizations by learning to think and act as a
digital disruptor, and bring small scale projects or proof of concepts inside, learning through disruption internally. The evolution of the CIO is at a critical juncture that may
provide competitive advantage for the Manufacturing companies that can balance the see-saw of cost, and business enablement to support organizational growth.
FURTHER INFORMATION
Tim McCabe
Managing Director, CIO Advisory
KPMG in the US
T: +1 248-765-3370
E: [email protected]
Donna Meshaka
Managing Director, CIO Advisory
KPMG in the US
T: +1 954-629-9134
E: [email protected]
www.kpmginfo.com/cioagenda
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that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular
situation.
© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member
firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.